GOP senators press Federal Reserve on climate agenda amid record inflation, banking uncertainty

EXCLUSIVE: A coalition of nine Senate Republicans led by Sen. Dan Sullivan, R-Alaska, sent a letter Wednesday morning to Federal Reserve Chair Jerome Powell, blasting the central bank for its climate agenda amid other pressing issues.

Sullivan and the other Republicans criticized the Fed — which has a statutorily defined mission of promoting “maximum employment, stable prices, and moderate long-term interest rates” — for increasingly pursuing a climate agenda, according to the letter first obtained by Fox News Digital. The lawmakers said the central bank should instead focus on issues within its mandate such as inflation and uncertainty in the banking sector.

“We are growing increasingly frustrated with the Federal Reserve’s engagement on environmental policymaking and research far outside of its statutory mandate, all while there is persistent inflation and a crisis of confidence in the banking sector,” they stated in the letter to Powell. 

“We urge you to rein in the Fed’s regional banks and its economists who are seemingly ignoring your leadership,” the letter continued. “The Fed’s credibility hangs in the balance, and without a course correction, history will find you either complicit or ineffective as Chairman.”

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The Republicans pointed to comments from Powell throughout his tenure leading the central bank affirming his commitment to the Fed’s statutory mandate, leaving social and political policies to Congress. 

In January, Powell stressed the importance of the Fed resisting “the temptation to broaden our scope to address other important social issues of the day.” The Fed chairman even went as far as to say that climate policymaking should be left to the “elected branches of government and thus reflect the public’s will as expressed through elections.”

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However, a week after the comments, which Powell made during a global summit in Sweden, the Fed told the nation’s six largest banks to produce data about how their business might be impacted by climate change and, separately, a green transition to net zero greenhouse gas emissions by 2050.

“The Fed is actively signaling that bank activities that do not further the goals of net zero by 2050 are inherently risky and disfavored,” the Republicans’ letter Wednesday added. “This drives capital away from traditional energy development at a critical time for our economic and national security, while empowering America’s adversaries.”

The Fed’s so-called climate stress test, the letter continued, is the logical result of a “persistent and growing track record of climate activism at the Fed.” They noted, the central bank has also joined the Network for the Greening of the Financial System, the Fed’s regional banks host climate-focused events, and it has published hundreds of policy papers, studies, and documents dedicated to climate change.

Meanwhile, over the last two years, year-over-year inflation has worsened from 2.6% to a more than four-decade high of 9.1% in June 2022, but has come down to 4.9% as of April. The slowed inflation rate rise has been coupled by rapid Fed rate hikes, from near-zero 0.25% in March 2022 to 5.25% this month.

The Federal Reserve has been widely criticized for maintaining extremely low pandemic-era interest rates for too long.

In addition, three major banks — First Republic Bank, Silicon Valley Bank and Signature Bank which had assets worth $212 billion, $209 billion and $110 billion, respectively, according to Federal Reserve data — recently imploded partly as a result of high interest rates. The Federal Deposit Insurance Corporation estimated its actions to resolve the failures will cost taxpayers about $36 billion.

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“When federal regulators become political and start prioritizing activist-driven ESG principles rather than doing the jobs federal law requires them to do, areas of concern quickly become crises, and the American people are left to face the consequences,” Sullivan told Fox News Digital in a statement. 

“From the regional banking crisis experienced earlier this year to the growing influence China holds on American businesses, there are serious problems and national security threats that require our federal government’s focus,” the Alaska senator continued. “Unfortunately, during the Biden administration, we’ve seen the politics of far-left environmental activists infiltrate a wide range of offices and agencies intended to be apolitical.”

“Whether it’s the Securities & Exchange Commission, the Federal Reserve, the Defense Department, or others, my colleagues and I will continue to hold federal officials accountable to the American people and ensure they are following the law,” Sullivan said

Sens. Mike Crapo, R-Idaho, Joni Ernst, R-Iowa, Mike Braun, R-Ind., Roger Marshall, R-Kan., Ted Budd, R-N.C., Mike Lee, R-Utah, Kevin Cramer, R-N.D., and James Risch, R-Idaho, signed onto Sullivan’s letter Wednesday.

And Sullivan penned a separate letter Tuesday to Securities and Exchange Commission Chairman Gary Gensler, expressing his concern about the Wall Street regulator’s focus on climate change.

“The SEC should be focusing on these issues and ensuring that American investors are protected from a shaky Chinese economy and dangerously fickle and politically-focused authoritarian rule by the CCP,” Sullivan wrote in that letter. “Yet the SEC seems divorced from this reality, pursuing an aggressive agenda of unnecessary climate disclosures and other burdensome rules.”